(Tiểu luận) select a listed company and analyseitsmanagementenvironment recommendsuitableand feasible strategyfor that company

RIVALRY AMONG COMPETING SELLERSCompetitive Landscape China- Chinese Cuisine Market - Haidilao Leading in a Highly Fragmented Market● The Chinese cuisine market in the PRC is highly fragm

FOREIGN TRADE UNIVERSITY HO CHI MINH CAMPUS

-oOo -PRESENTATION Select a listed company and analyseitsmanagement environment Recommendsuitableand feasible strategy

for that company.

Group: 4

Subject: Business Management

Class: K60CLC7

Thành phố Hồ Chí Minh, tháng 09 năm 2022

5.4 Renewable technologies 13

6.2 Transparency in Judiciary System & Processes + Time Taken for Court Proceedings 13

HAIDILAOA/ INTRODUCTION

4 FEATURE SERVICES

Taking customer experience as our top priority, we always provide innovative and pleasantservices to our customers All the personalized services offered by our restaurants are derivedfrom the innovative ideas of our staff These warm and personalized services turn every mealinto a happy experience (20)

5 IMPRESSIVE NUMBERS

In 2021: 1,443 restaurants in total in China, Hongkong, Macao, Taiwan and other 11 countrieswith more than 378 million customers (6)

B/ EXTERNAL ENVIRONMENT

I/ MACRO ENVIRONMENT (PESTEL)

1 POLITICAL

1.1 Government stability

- No imminent threats from terrorists and military issues in existing markets (1)

- Political stability in existing markets: China, HongKong, Malaysia, Singapore, VietNam,South Korea, Japan, The USA, Australia…→ support business’s growth expansion (2)

- China has good records of consistently adhering to international treaties, specifically WTO’sregulations on Restaurant Industry (3)

- Enhance trade relations with other countries + attract FDI → equity for business to upgradeinfrastructure + brand image (4)

1.2 Tax policies

High domestic tax rate : “It is understood that Singapore has to pay a very low tax, nomatter whether it is personal income tax or corporate income tax, it will not exceed 20% ,but it is different in China It needs to pay 50% of the tax.” (5)

1.3 Competition regulations

China’s comprehensive system of competition law (came into effect on 1 August 2008) withkey rules against monopoly -> ensure fair play among competitors, monitor and regulateimport and protect rights and benefits of stakeholders (6)

1.4 Trade blocs

China maintains17 Free Trade Agreements (FTAs) and is implementing additional 8 FTAs

→ Business can lower resource costs, increase supply of talented labor, and benefit fromgaining advanced technology and knowledge from foreign experts (7)

51

Chapter 12 - Testbank

2 ECONOMIC

2.1 GDP trends and rate of economic growth

- GDP growth rate increases signals growth in demand -> Business leverages this trend byexpanding its product range and targeting new customers (by identifying changes inconsumption patterns -> emerging value proposition)

- The Gross Domestic Product (GDP) in China was worth 17734.06 billion US dollars in

2021 GDP in China is expected to reach 16700.00 USD Billion by the end of 2022

2.2 Inflation Rate

Impose impact on the demand of products → High inflation can cause an increase in prices(→ lose brand loyalty and constant endeavors to manage costs.) and decrease in disposableincome (→ lower purchasing power)

4.2 Internet penetration

Leverage social media and e-commerce to increase direct retail to consumers and sales;leverage Internet’s trends to expand awareness among customers, increase customers’ loyalty.4.3 Investment in R&D

Technological innovation can boost technological upgradation in business’s policies inmanagement, cost-effective marketing, and upgrade production procedure potentials of 5G →Invest more in R&D to improve customers’ experience with increased delivery speed andavailable access

5 ENVIRONMENTAL

5.1 Environmental regulations

Have a great impact on business performance, national budget’s allocation and cost advantage

in the Restaurant Industry: Need to adhere to all environmental regulations, norms, especially

in countries with strict environmental law systems

5.2 Waste management

Many countries have strict norms of waste management and sustainability → Associate to thewaste management authorities and institutions to be able to follow regulations on hygiene anddisposal and avoid any future environmental scandals

5.3 Customers’ awareness

How customers evaluate green lifestyles and eco-friendly products directly impact business’sperformance → altering product innovation priorities, develop sustainable products → catertraditional value proposition

5.4 Renewable technologies

Some countries offer subsidies to stimulate investment in renewable technologies → Businesscan leverage opportunities to invest in renewable technologies to ensure long-termsustainability → enhance brand image → increase stakeholder satisfaction and expand thecustomer base

6.3 Consumer Protection Laws

Be aware of what are the consumer laws in the country, what is the rate of enforcement, what

is the attitude of authorities towards consumer protection laws → Align its policies andprotection for customers’ private information

6.4 Employment Protection Laws

Know clearly what employment laws and discrimination laws are in the country and are theyconsistent with the business model → Providing a secure, fair, equal work environment for theworkforce → increase productivity and attracting talented labor

6.5 Intellectual Property Rights Protection

Haidilao should assess the level of protection that intellectual property rights get under thelegal system of the country → protect business’s innovations and patents

6.6 Health & Safety Laws

Different countries have different attitudes towards health and safety → business conductsthorough research and needs to comply with the health and safety laws in the country, providetraining, guidelines for physical and emotional safety for employees

II/ MICRO ENVIRONMENT (PORTER’S 5 FORCES)

1 RIVALRY AMONG COMPETING SELLERS

Competitive Landscape China

- Chinese Cuisine Market - Haidilao Leading in a Highly Fragmented Market

● The Chinese cuisine market in the PRC is highly fragmented, with the five largestplayers holding only 0.8% of the total market share in 2017

● Haidilao ranked first in the Chinese cuisine market in the PRC in 2015, 2016 and 2017

● Gross revenue of Haidilao is more than 2 times higher than the 2nd company

- Hot Pot Restaurant Market — Haidilao the Clear Leader

● Players in the hot pot restaurant market are intensely competitive with respect to foodquality and consistency, the value of money, ambiance, service, location, supply chain,and availability of trained employees

● The five largest players in the hot pot restaurant market in the PRC only held anaggregate market share of 5.5% in terms of 2017 revenue Haidilao ranked first in thehot pot restaurant market in the PRC in 2015, 2016 and 2017, with a 2.2% market share

in terms of 2017 revenue

Global Chinese Cuisine Market - Haidilao the Clear Leader in Overseas Expansion.

- In order to take advantage of the growth of the global Chinese cuisine market, a number ofChina-based restaurant groups have expanded overseas in the past few years

- The five largest players only held a 0.6% share of the global market in terms of 2017revenue Haidilao was the largest Chinese cuisine company globally in 2015, 2016, and 2017

in terms of revenue

2 SUPPLIERS

We primarily procure:

- Soup base for our hot pot Yihai Group has been our primary supplier of soup base

- Food ingredients, including meat, seafood and vegetables

- Decoration materials and renovation services, decoration project management services,equipment and consumables used in our restaurants

- We procure food ingredients that do not require processing from third-party suppliers andProcessed Ingredients from Shuhai Group

We procured warehousing and storage services and logistic services and food ingredients fromShuhai Group

- Decoration materials, renovation services and decoration project management services fromShuyun Dongfang

- Soup base and instant hot pot products from Yihai Group

- Lamb products from Jarud Qi Haidilao

- Human resources management and consulting services from Weihai Consulting

We have entered into long-term framework agreements with these parties to secure a stablesupply of goods and services

Our purchase amount from our five largest suppliers amounted to RMB 1,948.1 million, RMB2,530.5 million, RMB 4,928.6 million and RMB 2,288.7 million in 2015, 2016 and 2017 andthe six months ended June 30, 2018, representing 63.3%, 68.2%, 81.7% and 51.7% of our totalpurchases in the respective periods

(Haidilao Global Offering, page 5)

We generally have more than two qualified suppliers for each type of major foodingredient to reduce reliance on a single supplier Through our years of operations, we haveidentified and established stable business relationships with high quality suppliers for ourmajor food ingredients → Suppliers are not too concentrated

Have “Qualified Supplier List” Since 2017, Our Group has been identifying alternativesuppliers for the Haidilao Customized Products in case the supply from the Yihai Groupcannot meet its requirements and demand, and has entered into an agreement with anindependent third-party supplier to procure a specific type of soup base product which theYihai Group is currently unable to manufacture → Substitute of ingredient products areavailable

We rely on certain connected persons for supplies and services and any shortage orinterruption in supply could slow our growth and reduce our profitability

Difficulty in finding reliable suppliers of food ingredients meeting our quality standards atacceptable prices and quantities → Switching cost is high

(Haidilao Global Offering, page 212)

→ Have strong relationships with suppliers

3 BUYERS

- Brand recognition Haidilao had the strongest brand recognition and was the most populardine-out option among Chinese cuisine brands

- Dining experience Haidilao ranked first in terms of dining experience among Chinesecuisine restaurant brands Approximately 99.3% of participants who have dined at Haidilaoleft satisfied, among which over 50% of participants were very satisfied with the diningexperience.

- Service Haidilao was considered to have the best service attitude among major Chinesecuisine brands

- Differentiating factors Participants considered Haidilao’s enthusiastic and intimate service,tasty dishes, hygiene and healthiness of the food and menu variety to be the key factors whenchoosing Haidilao In particular, participants considered enthusiastic and intimate service to bethe most differentiating factor in Haidilao’s dining experience

- Repeat guests 68.3% of the participants who have dined at Haidilao visit at least once everymonth and 98.2% of the participants who have dined at Haidilao would visit again

- Hot pot is the most popular dine-out option in the PRC within the Chinese cuisinesegment Hot pot is popular because of the diverse food ingredients available, the ability topersonalize taste preferences, the fresh and healthy cooking method and the social element ofthe cuisine

- Sichuan style hot pot accounted for approximately 64.2% of the PRC hot pot restaurantmarket in terms of revenue in 2017 and is the most popular hot pot style in the PRC, according

to the F&S Survey

- The popularity of Chinese cuisine in overseas markets is increased → Buyer demand is high

(Source: National Bureau of Statistics, Frost & Sullivan Analysis)

- Buyer cost of switching to competing products is low

- After Covid-19, buyers’ income is lower → more price-sensitive

4 SUBSTITUTES

- Haidilao’s substitutes are:

+ Other restaurants: BBQ, noodles, steamed hot pot

+ Self-cooking

- There are too many substitutes → increase competitive pressure

- Haidilao targets the high-end customer segment After Covid-19, customers are more likely

to be concerned about their health and diet → increase the possibility that they cook their ownmeal at home

- Overall, the threat of substitutes is strong for the following reasons:

+ High availability of substitute products

+ Low switching cost

5 NEW ENTRANTS

- Entry barriers and challenges: Although there may not be significant entry barriers inoperating and managing a single restaurant, there are significant entry barriers in becoming alarge-scale chain restaurant group with multiple restaurant locations

- Ability to manage growth A large-scale chain restaurant generally has a large number ofrestaurant staff Despite comprehensive internal policies, due to the labor-intensive nature ofthe restaurant business, it is more difficult to ensure that all of the staff comply with laws andregulations of multiple jurisdictions, especially the detailed and stringent regulations inrelation to food safety

- Supply chain management The quality and the taste of hot pot depend significantly on thefreshness and quality of food ingredients For a large-scale chain restaurant group, it is crucial

to have the ability to procure fresh and high quality food ingredients at favorable prices fromreliable suppliers and manage the inventory and logistics for food ingredients across all of itsrestaurants It is also important to ensure high quality food ingredients are available atrestaurants located in different regions and countries New entrants with less supply chainmanagement experience may not be able to manage their supply chain effectively, which mayresult in higher costs as well as have an adverse effect on the guest’s dining experience

- Initial set-up capital expenditure Operating a large-scale chain restaurant group requires alarge amount of initial investment for rental costs, decoration costs, equipment costs and staffcosts, among others For new entrants with less capital and less bargaining power, the initialset-up capital expenditure required for large-scale operations may be too significant andinsufficient revenue generated from newly operating restaurants may create cash flowproblems.

- Increasing labor costs and high employee attrition Employee attrition is a pain point ofthe catering industry at large Like other restaurants, hot pot restaurants require a large number

of service personnel Low attrition rates allow restaurants to maintain their service quality andcontinued growth As a result, restaurants may need to offer higher salaries in order to retainexperienced personnel

is not only memorable, but also can be evoked at any time in life scenes As for the goodmeaning, besides the good luck of winning the game, the name is also associated with theaction of "fishing for food" from the pot, which is a vivid image Therefore, the foundersdecided on the name "Haidilao"

1.2 Logo

In 2019, based on the mid-to-high-end brand positioning and international marketdevelopment strategy, Haidilao adjusted its corporate image logo, one is to change the Chinesepinyin "HaiDiLao" to English "Hi", in line with Haidilao's strategy of simultaneous

high-speed expansion at home and abroad "Hi" not only harmonizes with the first word "Hai"

of "HaiDiLao", but also serves as a global symbol, which can refer to a mutual greeting of "Hi", can also be interpreted as "High" for having a good meal, which can make foreign friendseasy to read and remember at the same time and better understand China's unique hot potsocial culture; The second is to simplify and merge the Haidilao's pattern and characters,deleting the original wing-like pattern and simplifying the long series of pinyin characters, andmerging them together into a concise combination of the circle "Hi" and the Chinesecharacters "Haidilao", which gives people a simple, high-end, international feeling The "i" isdesigned in the shape of a chili pepper, representing the identity of Haidilao, which is knownfor its spicy Sichuan-style hot pot

Communication is a must in establishing trust among people and Chinese hot pot is a perfectchoice for enhancing social networking at table Haidilao is committed to encouraging morepeople to chat with each other and enjoy their food at table, and creating a kind of table culturefavored by young people around the world

3 CORPORATE SOCIAL RESPONSIBILITY

3.1 Devotion to communities

While ensuring steady operation, we genuinely appreciate everyone who has supported us andnever forgot our original aspiration We actively fulfil our corporate social responsibilities,

encourage our employees to participate in charity and volunteer work, contributing to localcommunities.

3.2 Bingwen library

The name “Bingwen” is taken from the grandfather of Mr Zhang Yong, Chairman of Haidilao

in honor of the old gentleman and as a way of giving back to society Our motto is “Think andaspire, read and learn” The public library project was initiated to boost cultivation of themind, encourage people to read more and better and build a place for permanent learning.Located on the third floor of Xuhai Times Square, the library fosters a dynamic modern spaceacross an area of 1,080 square meters, which are divided into several sections by an entireGRG decorative material and book shelves It employs the Chinese Library Classification(CLC) or Classification for Chinese Libraries (CCL) scheme to classify over 30,000 booksinto 26 categories Visitors can read e-books, borrow printed books, and enjoy interactivereading sessions and public lectures

3.4 Jianyang Tongcai Experimental School

Jianyang Tongcai Experimental School is a private boarding school established in June 2001

by Sichuan Haidilao Catering Co., Ltd Provided with the funds from Haidilao, the School isgrowing rapidly due to the hard work of all faculty and students, under the support of themunicipal Party committee and people’s government of Jianyang City and competenteducation administrations at different levels

The name of Tongcai School was inspired by “Tongcai Academy”, the predecessor ofJianyang Middle School The term “Tongcai”, literally versatile talents in Chinese, representsthe mission and goals of the school that seeks to train every student to be successful withwidely developed skills

- According to Haidilao's annual report of 2021:

+ Total equity was 7,928,625 000 RMB

+ Non current assets: 16,615,985 000 RMB

As the intelligent brain of the intelligent kitchen, IKMS is able to collect the data of all links inthe intelligent kitchen and conduct multi-dimensional analysis, so as to monitor the overallstatus of the kitchen’s operation, production, stock and expiration date of food to achieveunified management.

Combined with the technologies of machine learning and AI, IKMS aims to realize automaticproduction management process, intelligent and accurate inventory management, informativeand visualized production data, and whole life cycle monitoring of dishes to ensure productquality

Intelligent Serving: Scientific and technological innovation helps improve food safetystandards

3 HUMAN RESOURCES

3.1 Training and development

- The company provides in-house training specific for different job roles and job designs to itsemployees which helps them in achieving their desired job responsibilities

- The training and investment by the company in individuals leads to strong organizationalcommitment, and is a valuable competency in allowing the Haidilao Selling Hot Pot or SellingService to benefit through a strong and committed workforce